Italy: About to Give Solar the Boot?

"It was a huge bubble in Spain, and people are worried that it could happen again," the Navigant Consulting director said. "Italy has by far the most favorable tariffs, and there will be a feeding frenzy. But it could all come to a roaring halt at the end of 2010."

Banks make decisions to go forward with solar projects based on expectations of beating a deadline for tariff cuts, or a tariff cap being put in place. In Spain, while many projects met the deadline and started production in time, other solar projects were left out in the unfavorable-tariff cold.

One can hope that banks are shrewder this time around -- for example, by only funding solar projects that have a reasonable expectation of being completed a full three months ahead of the year-end 2010 deadline. Then again, this is solar, and aggressive projections founded on the desire to take advantage of favorable tariffs before the tariff party ends have tripped up the industry in the past.

Look at Spain. Look at what people expect to happen in Germany.

It's hard to tell at this point if Italy is going to give solar a needed kick in the butt, or give solar investors the boot after fomenting yet another short-term feed-in tariff bubble.

-- Reported by Eric Rosenbaum in New York.

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